Here's how interest rates are set on peer-to-peer (P2P) platforms
Updated : May 10, 2019 03:59 PM IST
The lending method, however, involves more risk and effort than borrowing from a bank. Individuals who like to avail loans, where they are not charged with higher interest rates or will face hurdles in availing loans from banks due to poor credit history, go for peer-to-peer lending.
As like banks, P2P lending platforms also assess your risk and associate the interest rates to it. Before disbursing a loan, the investor looks at your credit history, repayment behavior, past loans and its ability to make payments on time.
Like banks, fintech companies rely heavily on data analytics to determine a borrower’s repayment capabilities and financial behavior which determines the interest rate at which a person will be given loans.